A mortgage is like a special kind of loan that helps people buy a home when they don’t have enough money to pay for it all at once. Here’s how it generally works:
1. Borrowing Money: You borrow money from a bank or another lender to buy a house.
2. Paying Back: You agree to pay back the money over a set period, usually many years, like 15 or 30 years.
3. Interest: You pay a little extra called interest, which is the cost of borrowing the money.
4. Secured Loan: The house you buy with the mortgage serves as a guarantee. This means if you can’t make the payments, the lender might take the house back.
5. Monthly Payments: You make monthly payments to the bank. These payments usually include part of the money you borrowed (the principal) plus the interest.
6. Types of Mortgages: There are many types of mortgages, like fixed-rate, where your interest rate stays the same, or adjustable-rate, where it can change based on interest rates overall.
Getting a mortgage is a big step because it involves a lot of money and a long commitment, but it’s how most people are able to own their home.
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